Why Socialism and Wealth Redistribution Don’t Work and Cause MORE Poverty, Inequality, and InjusticeBy Capitalist in Chief
Those rich people don’t need all that money. They don’t pay their fair share of taxes. And a lot of good can be done if all that money is taken away from those people, who don’t need it anyway, and is given to other less fortunate people so that they can have better opportunities to advance their lives.
The above paragraph seems to be the essence of liberal economic thought. I realize that many liberals these days object to the notion that what they really want is socialism. However, arguing nomenclature is of no substance. Therefore, I’m just going to say that the philosophy described above falls under the umbrella of socialism, and just call it that.
We can argue fairness all day long, but for now I want to tell you what happens when socialism or whatever you wish to call it, is deployed in an attempt to correct the perceived economic (or “social”) injustices of the world.
Many people who support socialism, do so because they want a fair, poverty free world, with justice for all. Therefore, if you support socialism, i.e. wealth redistribution and a large government that deploys a heavy set of social programs to achieve all that, I would just like to let you know of the following:
The socialist methods deployed to supposedly achieve a better world unleash an AVALANCHE of negative side effects that utterly dwarfs any of their original intentions, and brings more poverty, more inequality, more injustice, less prosperity, and more misery. This is because those methods go against an essence of human nature that cannot be changed even by people with the best of intentions.
Yes, socialism exacerbates the very problems it claims to solve.
Disagree? Then read on!
Unintended Consequences of Socialist Policies
There are several reasons why socialism, and specifically wealth redistribution by means of taxing the rich, does not work. All of these reasons stem from one important fact of life:
People have a strong desire to do whatever is in their own perceived self interest!
The following are detrimental unintended consequences of socialism that stem from the above fact and undermine everything socialism is meant to accomplish:
- Much of the money that goes to the government ends up being wasted, resulting in ineffective government programs, and less wealth for EVERYBODY. Learn more.
- Many are tempted to assume that money collected by the government goes to help the poor and downtrodden. However, much of that money ends up in the hands of the rich and politically connected, those who have the most resources and ability to lobby for it. Learn more
- Socialism concentrates money and power in the hands of the government. When government grows, the greedy and corrupt don’t go away. Conversely, they now have a more powerful tool in their hands, the government itself. Learn more
- The richer you are, the easier it is for you to avoid increasing taxation and leave the bill to the middle class. Learn more.
- A soak-the-rich, high tax strategy inhibits the economy. And who is hurt the most by a slow economy? Not the rich! Learn more
- The transfer of earned wealth that socialist policies mandate are a detriment to entrepreneurship and innovation. Entrepreneurship and innovation are driven by the potential for material rewards. If we take away or reduce the material rewards, we’ll have less innovation. Less innovation means less of all the cool, useful, and life-saving stuff we all love. Learn more
- High taxes and government regulations make it more difficult to start and grow a business, thereby leaving much greater opportunities for those who are already rich and have the resources to overcome those difficulties. Learn more
- Social programs create more demand and need for those very programs in a self perpetuating cycle because given government handouts, people come to expect and rely on them. And therefore, you can never spend enough, because the more you do, the greater the need to do so becomes. Learn more
- Social programs are a disincentive to work and act responsibly. After all, if some or all of your needs are taken care of, and if someone else picks up the tab whenever something goes wrong, why would you worry about such minor details as work ethic, productivity, financial responsibility and family obligations? Consequently, when productivity takes a downturn, leading to a shrinking economy, guess who suffers… everybody! Oh and as always, the rich suffer the least. Learn more
- A combination of the above points causes a vicious cycle of decreasing revenues and increasing demand for social spending that results in a socialist government running out of money and having ‘no choice’ but to perpetuated tax increases to every level of society, rich and poor. Learn more
Because of the avalanche of problems socialist policies cause, no amount of social spending and taxation will ever overcome the problems it is supposedly set out to solve.
The Road to Poverty, Inequality, and Injustice
- Socialism causes poverty because it slows economic growth and progress through government waste, taxation on productive economic activity, discouraging innovation and the creation of hurdles for business. In addition, socialism causes poverty because it creates a disincentive to work and act responsibly.
- Socialism causes inequality because much of the money that goes to the government ends up in the hands of the rich and politically connected, it’s easier for wealthy individuals to avoid taxes, and it creates hurdles for business that the wealthy find easier to overcome. Socialism is a way for the rich to shut the door behind them, preventing those who are on their way up from reaching their destination.
- Liberalism tends to liken inequality to injustice, therefore, just by using the standards set by liberal thinking, socialism causes injustice because of the inequality it promotes. But more directly, socialist policies (wealth redistribution, social programs, and regulation) necessitate a larger, more powerful, more meddling, government that becomes a powerful tool for the wealthy, politically connected, and bureaucrats on “power trips” to take advantage of the rest of society.
The Price of Socialism
Because of the avalanche of unintended consequences, socialist policies are at best extremely limited in what good they can do. Yet, many politicians represent those as some grand solution to humanity’s problems and completely neglect all the problems socialist policies cause. This is akin to touting a “miracle” cure for cancer, yet failing to mention it causes blindness, brain damage, and eventual cardiac arrest. Socialism’s avalanche of unintended consequences cuts deep into any benefits that society might derive from social programs. And anyone, especially voters and politicians, should be aware and honest about the real price that socialism demands.
First, there is little chance that, on average, a middle class person would come out ahead with government entitlements he/she receives after subtracting all the extra taxes and economic costs he/she bares for those entitlements. This is because, the government can not raise enough revenue just from those considered rich to cover the cycle of decreasing revenues and increasing demand for social spending brought on by socialist policies. We only need to look at the high level of taxation on the middle class of European social democratic states to see this is indeed the case.
If you are not a person who is poverty stricken, and you’re not going to run a welfare scam, then do not believe for a second that the government will take from the rich on your behalf. You will pay through income taxes, payroll taxes, sales taxes, property taxes, inflation etc.
And then there are the poor. They earn too little for the government to take anything of significance, and can come out ahead in dollar amount given aid from the government. It’s great for them if they’re perfectly happy being perpetually impoverished, living the austere life at a near subsistence level given to them by the government.
But overall, the poor will also pay a price! And so will everybody else… but as always, not so much those who are very rich. This price is lesser economic opportunity. Yes, the very thing that the socialists supposedly champion for the poor. More specifically, we have greater unemployment and less business opportunity. Western Europe for instance, with all its socialist policies and supposed compassion, has boom-time unemployment rates that are roughly what the United States gets during recessions.
And to top it all off, there’s the price of slowed innovation, entrepreneurship and technological advancement.
The government can either completely help a small number of people, or slightly help a large number of people. What it absolutely can not do is completely help a large number of people. It’s just impossible to expect a small minority, i.e. the rich, to support the rest of the population. It cannot happen! The government can’t solve everybody’s problems. It has never happened, and never will happen.
But mustn’t we help people in need? Yes, we should help some who can’t take care of themselves. However, the more money we spend on this via the government, the more significant the unintended consequences become, devastating not just those whom we want to help, but many others. And therefore, wealth redistribution and social programs are not the answer to some great society and a better world order and should be kept to a minimum. But unfortunately, when faced with poverty and social problems, the socialist response is even more socialism, the very thing that makes those problems worse.
If you are reading this and you are a rich Hollywood type who supports Barack Obama, the socialist in chief, or perhaps you think that Obama is not socialist enough, then in the name of fairness, I accept donations of a million dollars, or any other amount, so that I won’t have to be personally affected by the damages of socialist policies. You don’t need nor deserve all that money anyway. Seriously, I know you weren’t going to give it all to a charity. So in the name of fairness, contact me here to make arrangements. And since the donation is 100% voluntary and doesn’t involve the government, it won’t suffer from all those pesky unintended consequences.
Otherwise, if you are not a rich Hollywood type, then good luck with all of the above.